The Bristol property market has proven to be incredibly resilient, the question is whether it will continue throughout 2019? Are you ready for a shaky ride, or expecting something else? Let’s dive into the stats!
Bristol Property Price Trends
According to the UK House Price Index which relies on completed sales data, the last quarter of 2018 saw house prices drop by -0.51%.
However, the latest figures that are currently available (December 2018) saw house prices increase by just 0.38% month on month. This is up from the previous month which saw a drop of -0.89%.
Overall despite this last quarter drop, there has been year-on-year positive growth of 2.61%.
This leaves the average property price in Bristol at £281,980 (Dec 2018) compared to £274,797 (Dec 2017). Although 2.61% is positive growth, it is significantly down on the figures for the beginning of 2018, which saw year-on-year growth for January 2018 standing at 6.34%.
Is this trend of slower or possible negative growth going to continue?
As we approach the Brexit deadline, there is clearly uncertainty in the property market. Lots of people are waiting and watching and the experts have their own views, which you can see here. But there is no doubt the trend for property prices in Bristol is on a downward trajectory but it must be remembered that it is still a positive year on year, despite the monthly and quarterly fluctuations. In fact, we haven’t seen negative year-on-year figures (drop in house prices) since January 2012.
Interestingly two potential indicators of the future direction of Bristol property prices is that during the twelve months of 2018 we saw 5 or those months with negative growth. This is not a one-off as 2017 also had the same number of months with negative growth and showed similar patterns to 2018.
The other interesting statistic is the number of transactions that took place in 2018. The November and December figures have not been published yet, so it is an incomplete picture, but so far it looks likely 2018 transaction levels of people buying property are going to be significantly down on the previous year.
My feeling is that these downward trends will continue for a while, but we must remember overall growth is still a positive year on year, it’s just that the rate of growth is showing a downward trend. The question is whether it will tip into negative territory rather than positive. The trajectory of the market suggests it is heading into negative territory and I have no doubt this is being driven by lower activity levels which in part is due to the political uncertainty.
Is the Bristol Property Market About to Crash?
Personally, I don’t see it, yet!
The demand for property is still strong in Bristol which I’ve written about before and I can’t see this changing anytime soon. Yes, there is a downward trend but my instinct is this has been driven by outside factors which have had a knock-on effect on inactivity and therefore transactions levels. Although transaction levels are down, they are still significantly above the lows seen in 2009 which saw the lowest average house prices over the last 10 years.
Let’s also not forget at the moment mortgage lenders also have an appetite to lend (although lending criteria is still tough), and when taking into account low-interest rates and Bristol being a buoyant city, there doesn't seem to be a reason to be overly negative when looking at the fundamentals of the Bristol market.
In fact, we could see an initial Brexit bounce as the demand hasn’t disappeared, it’s just been put on hold. People have been waiting and watching and there is pent-up demand in the system. Subject to positive outcomes in the wider economy post-Brexit we could see this pent-up demand enter the market, and potentially lead to a bounce in Bristol prices before finding a sustainable level of growth.
However, the positive fundamentals must be tempered by outside factors which inevitably can impact sentiment and confidence in the property market. With uncertainty, there is always the potential for a surprise! Whether that is a systemic economic crisis and/or a large interest rate increases it’s hard to know, but this would change the game! Interestingly the lows of 2009 followed the last big economic shock, so for me, the question is more about whether there is another surprise around the corner, more than the overall market itself.